Investing in Gold and Other Precious Metals: Tax Pitfalls

With the price of commodities sky-rocketing in the past decade, many individuals have made substantial gains by directly investing in physical gold and other precious metals, especially in popular investment vehicles such as gold Exchange Traded Funds (ETF’s). However, there may be a downside for unsuspecting investors when it comes to paying taxes on those gains.

The general rule in the US is that gains on the direct sale or exchange of precious metals are taxed at the “collectible” rate (currently 28%), and not the more favorable capital gains rates that other common investments, such as most stocks, receive. The IRS has further specified that gold ETF’s are also taxed at this higher rate (however, certain exceptions may apply). In comparison, capital gains on the sale of precious metal mining companies on most listed stock exchanges, however, are taxed at the more favorable rates.

There are many other aspects of taxation that are too complex to detail for the purposes of a brief explanatory article. Additionally, various expenses associated with investing in physical metals may be deductible, depending upon your circumstances.

If You Plan to Sell Your Gold and Other Precious Metals Investments, Contact Sherayzen Law Office for Tax Advice!

With proper tax planning, it is possible to substantially limit the amount of taxes you will pay when you sell your physical gold or other precious metals. Sherayzen Law Office has the experience you need to answer all of your tax and international tax questions. Call (952) 500-8159 for a consultation today.

This article is intended to give a brief summary of these issues, and should not be construed as legal or tax advice.